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on June 2, 2021 by Dylan Cook in Fulfillment

Inventory Management for Ecommerce: What Brands Need to Know

In today’s competitive omnichannel market, brands must optimize inventory management for ecommerce. Last year, worldwide retail ecommerce sales amounted to $4.28 trillion, and reports predict that number will rise to $5.4 trillion in 2022.

Every aspect of brands’ fulfillment, marketing, and sales strategies are shifting accordingly—including inventory management.

While many inventory management principles apply to both ecommerce and traditional retail, there are a few big differences:

  1. Going out of stock has steeper consequences in ecommerce, with major impacts on products’ online listings.
  2. In ecommerce, brands are often selling individual units directly to consumers, rather than selling full pallets or cases to retailers.
  3. Ecommerce platforms offer more direct, timely insight into consumer behavior—if brands have the tools to effectively compile and analyze the data.

Inventory management is vital for ecommerce. With the right inventory management system, brands can analyze and act on multichannel sales data to increase sales, reduce costs, optimize fulfillment, and boost their bottom lines.

Inventory Management Helps Sales

Excellent ecommerce management of inventory boosts sales in two main ways: First, it helps brands like yours avoid the consequences of going out of stock. Second, it enables them to adjust to customer trends, helping their consumers buy what they want with less hassle.

Avoid going out of stock

Going out of stock leads to missed sales. That’s not new to retail or ecommerce, but it also hurts products’ search engine optimization campaigns, especially on marketplaces like Amazon and Walmart Marketplace.

For example, consider what happens on Amazon: the listing for an unavailable product is less likely to appear in search results, so potential customers may never discover it. The negative impacts can last even after the product comes back in stock.

Out-of-stock experiences can cause:

  • A drop in sales rank on Amazon
  • Losing brand loyalty
  • Loss of sales
  • Increased shipping costs (when playing “catch up” on arrival dates for backorders)

By contrast, if a management system for inventory protects against going out of stock, the brand gains an advantage in sales rankings via the marketplace platform’s performance algorithms.

Cater to consumer trends

Good inventory management also gives insight into consumer habits and the flexibility to use these habits to boost sales.

So if a brand discovers that its consumers often buy two of its coffee flavors together, it can offer a variety pack, enabling consumers to buy both in one click.

Of course, this requires both excellent data analysis and ecommerce-optimized fulfillment solutions to act on it.

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Data-Driven Inventory Management Increases Brands’ Bottom Lines

Ecommerce’s direct-to-consumer nature improves insights into what consumers buy, when, where, and how—not just how quickly a retailer sells pallets of a product. This rich data, combined with quality fulfillment data, empowers brands to increase sales and reduce costs, improving their bottom lines.

Limit losses

Keeping an eye on inventory movement will help brands reduce their inventory management costs. Demand and forecast planning can prevent significant loss by enabling brands to appropriately scale production.

Timely analysis further minimizes losses from expired goods. When brands know what’s moving and how close inventory is to expiring, they can respond with a campaign to push additional sales through coupons, bundles, or other tactics.

Optimize production

With data-driven demand planning, brands can get all the inventory needed for a specific period in a single production run, taking advantage of economies of scale.

Brands can further improve cost efficiency by tracking lead time. By knowing how long production, packing, and shipping take, they can optimize each step.

Of course, all this assumes a brand’s inventory management system helps it gather, analyze, and use data in an effective manner and with full transparency. That’s where the right technology comes in.

Inventory Management Software Helps Brands Leverage Data

Ecommerce inventory management software should make sales and fulfillment processes transparent, helping brands both understand and act on all relevant information.

Look for these three qualities when choosing inventory management software:

Image of three bullseyes with the words omnichannel capabilities1. Omnichannel capabilities

Effective ecommerce inventory management software can compile and analyze data from dozens of retail locations and ecommerce platforms in a single, smooth process.

Whitebox’s proprietary technology pulls information from all supported sales channels. It then converts the two-packs sold in stores, the limited-time bundles sold on Amazon, and every other configuration to the same inventory unit. Brands have no need to manually gather and convert data.

Illustration of boxes with the words Smart Analytics2. Smart analytics

Ecommerce inventory management software can analyze data to provide solutions—sometimes even before brands know they need them.

Whitebox’s technology helps brands do the math: It tells how many units they’ve sold in 30 days, how many they have in stock, and how long their inventory will last. Then it goes a step further, combining data on sales and lead times to prompt timely production.

Illustration of boxes on shelves with the words vertical integration with regards to inventory management 3. Vertical integration

The best technology supports solutions for every step of an inventory’s life cycle. That’s why Whitebox integrates both sales and fulfillment data and solutions—a surprisingly uncommon combination from other 3PLs.

Ecommerce Inventory Management Requires Optimized Fulfillment Strategy

Data means little without fulfillment solutions that can keep up. A complete inventory management system includes flexible, scalable storage and shipping to support multichannel sales and efficient fulfillment. That’s where an ecommerce fulfillment provider can come in.

Ecommerce works with individual units, a big departure from traditional retail. And Whitebox partners with brands to leverage this effectively.

We store at the base unit level—the smallest unit we’ll ever need to ship to a consumer. So if a brand decides to offer a discounted bundle, we can almost instantly enable that product configuration. This is just one way our data-driven fulfillment services support brands’ optimized inventory management at every step, from storage to shipping to returns.

Partner with Whitebox for Optimized Ecommerce Inventory Management

Profitable ecommerce inventory management systems help brands boost sales, go out of stock less often, and improve their bottom lines. An ideal third-party logistics provider will offer inventory management services and more, leaving no weak links in the value chain.

Whitebox empowers brands with a modern commerce platform for digital retail success, using proprietary technology and cutting-edge solutions to bring products from factory floor to front door. And we offer more than tools—we offer a partnership. Contact us today to get started.

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